Regional Australia emerges as commercial property hotspot as investment hits $6.2b
Australia’s regions are shedding their “second best” title as population growth and commercial property investment soars outside the major cities.
Regional transaction volumes grew to $6.2 billion in 2025 and accounted for about 11 per cent of the national volume, Knight Frank research has found.
A move away from traditional assets to achieve economic diversification is the key to the success of many regional hubs, says Alistair Read, Knight Frank’s senior economist, research and consulting
“The regions are increasingly seeing infrastructure investment that goes beyond what traditionally they might have had – a role in mining or agriculture for a lot of them,” he says.
“Economic diversification is providing stronger structural drivers for assets in those regions compared to the past, when you’ve been more reliant on one specific sector for a regional town.”
Stabilising interest rates, rising agricultural land prices (up 26 per cent from 2022 to 2025) and increasing tourism expenditure (set to jump by 22 per cent to $233 billion by 2030) are all contributing factors to the regional investment boon.
Retail emerges as regional Australia’s top commercial asset
Retail is the strongest of all the asset classes across the regions, accounting for 40 per cent of all regional transactions in 2025.
“In regions there are very big retail assets that exist, and they’ve been trading quite well in the past couple of years because they typically have quite good market shares,” Read says.
“When you have one big retail asset, they effectively capture a really good market there, but also, the market’s not big enough to have significant other competitors come and join.”
Population growth creates new property hotspots
Population growth is supporting the regional boom led by internal migration on the east coast. Regional populations are expected to grow by 10 per cent over the next decade to 9.6 million, and many coastal towns are forecast to eclipse this national average.
The population in Victoria’s Geelong is tipped to skyrocket by 22 per cent, Queensland’s Gold Coast by 19 per cent, NSW’s Wollongong by 16 per cent, Townsville in Queensland by 14 per cent and Newcastle, NSW, by 11 per cent.
Sea changers are set to drive demand for commercial property and strengthen economic conditions, particularly for the health and senior living industries.
“We’ve seen quite a significant increase in the ageing population of Australia, and a lot of those ageing people are leaving cities and going to regional areas,” Read says.
“As they go to those regional areas, they put stronger demands on health infrastructure in the area. We see this in Queensland, particularly Townsville, Cairns and Bundaberg; we’re seeing quite a bit of investment in health infrastructure there … with a lot of older people moving from Sydney and Melbourne up to the better weather.”
Defence spending is benefiting economies in regions such as Wagga Wagga, Townsville, Cairns and Tamworth. In Wagga Wagga, the Defence bases of the Riverina/Murray region are being upgraded, while Townsville’s already healthy Defence sector has expanded at an average annual rate of 5.8 per cent over the past five years.
The federal government will spend $240 million to upgrade HMAS Cairns, and in Tamworth, Defence facilities contribute to the strong demand for industrial assets across the New England region.
